Navigating the Consolidated Appropriations Act of 2021 (CAA) for Employers

COVID-19 has upended life as we know it, and it has uniquely affected employers and employees. As the government implements funding and pandemic aid packages, we’ve been with our clients every step of the way to ensure they can take advantage of the right aspects of these laws for their businesses.

The latest federal relief legislation, the Consolidated Appropriations Act of 2021 (CAA), was signed by President Trump on December 27, and it extends many relief measures that were created by Families First Coronavirus Response Act (FFCRA) and the CARES Act. We immediately activated product features within the Paylocity platform that enable our clients to easily take advantage of the bill’s key provisions. Key items included in this bill impacting employees and employers are:

• Allows for up to 40% of the loan to be invested into cloud and software upgrades
• Extends tax credits on leave benefits from FFCRA
• Extends and enhances Employee Retention Credits
• Provides additional funding for Paycheck Protection Program (PPP) loans with updated eligibility requirements and possibility of second loan for hardest-hit small businesses
• Expands unemployment insurance benefits
• Continues student loan provisions under tuition reimbursement plans
• Issues direct stimulus payments
• Provides temporary relief for Healthcare FSAs and Dependent Care FSAs
• Extends due date for repayment of deferred Employee Social Security tax

Re-activated product functionalities our clients can expect from Paylocity as they navigate CAA include:

• Reporting functionality for PPP loans
• The ability to capture clients' deferred social security taxes
• Extending FFCRA leave codes and balances to match the new legislation

Though CAA is an extension of CARES in many ways, we encourage organizations to assess the newly available options such as the updated eligibility requirements for PPP loans and the Employee Retention Credit. Under CAA, employers who have PPP loans are also eligible to leverage the Employee Retention Credit, opening up additional relief to a significant number of employers, particularly those in hard-hit industries. Additionally, some organizations may be eligible for a second forgivable PPP loan, so it’s important to review eligibility if businesses have exhausted their original funding.

To help our clients understand what forms of relief are available to them, Paylocity quickly deployed new educational resources as well. We hosted a podcast to walk our clients through the bill before it was even signed, updated our Paylocity Education and Knowledge (PEAK) system with more than 35 reference articles to reflect CAA’s details, and will soon roll out video-enabled microkits that walk through all aspects of the stimulus programs as well as how organizations can leverage Paylocity to facilitate their participation. Paylocity also hosted a webinar on December 30 where we discussed the provisions of CAA in more detail.

The timing of the bill enactment falling during a holiday week and the busy Year End season for HR and payroll professionals could lead to information being missed or benefits being underutilized. Business leaders should seek guidance from professional tax or other advisory resources to discuss which of these programs are best suited for their company's needs.

For more information on how Paylocity can help your organization navigate COVID-19, visit: https://www.paylocity.com/resources/covid-19/